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Mortgage Rates to Head Lower Due to Government Actions?

With the government injecting billions of dollars into mortgage back securities there is only one true direction that mortgage rates can go and that is down. 

Over the last two months, the Federal Reserve Bank and Ben Bernanke has done everything in their power to push mortgage rates lower.  The United States government is planning on purchasing over $1 trillion in mortgage backed securites and long term treasuries.  No one really knows if this is going to stimulate the economy and get the United States out of this horrible recession but one thing it is guarenteed to do is lower mortgage rates. 

Mortgage rates have been under 5% for a few weeks now and it looks like they will not even retrace back to that number.  Last week many analysts predicted we would see mortgage rates get closer to 5% as we need to retrace back to that psychological level.  That did not happen as mortgage rates dropped all the way to 4.82%.  It is likely that we are going to continue to see a drop in average mortgage rates as the 5% barrier has been broken and the government is pushing rates lower.

To try and forecast where rates will be in a year would be very difficult as that would be dependant on the overall economy.  If we see the economy stablize and start to get better, it is likely that the government will jump ship and stop buying all the mortgage backed securities.  If the economy stays as it is now or worsens, mortgage rates could fall all the way to 4% or below.  Ultimately, it is the overall economy that will be the best mortgage rate forecaster.  Until we see some type of recoveryArticle Submission, interest rates will continue to fall to historic lows. 

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For more information on mortgage rate forecasts make sure to check out Subprime Blogger.  The site offers financial advice as well as daily mortgage rate articles.

Mortgage Rate Predictions are offered every Monday and a subsequent article illustrating the accuracy of the predictions comes out every Thursday.



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